November 15, 2019

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Opinion

Party platforms short on small-business tax relief

The survey responses are in, and the results are disappointing.

The Canadian Federation of Independent Business conducted a survey of Manitoba’s party leaders to see where they stand on issues important to the province’s small business owners, including taxation, spending, labour policies and training programs. The Leaders’ Survey is based on years of research and recommendations made in CFIB’s small business platform.

While the parties’ responses contain some glimmers of hope, none of them will do enough to relieve small businesses from the many cost pressures they’re facing.

Those pressures are much higher now than what business owners faced three years ago. The provincial sales tax cut to seven per cent has been more than outweighed by federal tax changes, higher Canada Pension Plan premiums, the federal carbon tax, property tax hikes and soaring Hydro rates. The list goes on.

To offset these, the small business platform emphasizes tax relief in three key areas: raising the basic personal exemption on personal income taxes to the national average, lowering school property taxes and reducing the job-killing payroll tax (the health and post-secondary education tax levy).

Manitoba seriously lags behind other provinces on these taxes. Did you know that our basic personal exemption amount is the lowest west of Prince Edward Island, or that we have arguably the most punitive provincial payroll tax in Canada? Did you realize that businesses in Winnipeg are paying 3.9 times as much in school taxes as homeowners for the same value of property?

These "big three" taxes are killing small businesses and the thousands of jobs that rely on them. That should scare all Manitobans: small businesses make up 98 per cent of all businesses in the province and employ 73 per cent of the private-sector workforce. They are our job creators and community volunteers, and they help make our cities and towns unique. When the province’s small businesses succeed, so do all Manitobans.

Unfortunately, all party platforms neglect to provide the immediate tax relief businesses need.

The Liberal Party of Manitoba was the only party not to even respond to the survey; however, it did promise to overhaul the entire tax system to make it fairer and close loopholes. While this is encouraging, the promise is light on details. The language also sounds scarily similar to the 2017 federal tax changes that vilified small business owners as tax cheats.

The New Democratic Party of Manitoba committed to some immediate tax relief by proposing to increase the small business corporate income tax threshold to $550,000. While this is a step in the right direction, it is not nearly significant enough to match any of our proposed "big three" tax relief measures, to which they did not commit.

The Progressive Conservative Party of Manitoba has committed to fixing one of the "big three" taxes with its long-term plan to phase out school property taxes altogether, beginning the year after balancing the budget. This decision would provide significant tax relief for businesses, but only in the distant future. They also have seemingly abandoned their 2016 long-term plan to increase the basic personal exemption amount to the national average, likely because they relied on using carbon tax revenues for offsets.

That brings us to the Green Party of Manitoba, which committed to two of CFIB’s "big three" tax relief measures. They promised to end school property taxes and replace them with cost-neutral personal and corporate income tax increases. Similarly, they plan to reduce and eventually eliminate the province’s payroll tax. This would be an incredible step forward for Manitoba’s job creators, if not for the proposed carbon tax — $150 per tonne of CO2 emissions — used to pay for it.

Thankfully, the rest of the platforms are not all doom and gloom. Both the NDP and PCs introduced small business-friendly policies to return to balanced budgets by 2022-23, and to reduce red tape for municipal permits. The three parties that responded all committed to update antiquated laws by giving businesses the choice to open on statutory holidays, and pass prompt payment legislation (or similar changes) for the construction industry.

They also promised varying education and training programs to ensure graduates are better prepared to enter the workforce with the skills small businesses need.

While these policies are as important as they are overdue, they shouldn’t mask the fact that when it comes to the most important issue — tax relief — the parties leave businesses needing more.

Small business owners deserve bold political action that reflects the efforts they’ve taken when risking their homes and futures to start a business. Not every one of the "big three" tax relief measures will be accomplished on day one, but it is right to expect that the next government of Manitoba has at least a long-term plan in place to fix all of these glaring problems.

Jonathan Alward is CFIB’s director of provincial affairs for Manitoba. CFIB advocates on behalf of 4,800 small and medium-size businesses on Manitoba and 110,000 members across Canada. Jonathan can be reached at msman@cfib.ca or you can follow him on Twitter @CFIBMB.

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